Company Law in Different Countries

An exploration of company law in different countries is an interesting exercise in comparative law. In response to the idea that companies are a manifestation of culture, it is useful to note that company law in many cases reflects the differing cultural values of the jurisdictions involved. This paper will examine the question of how company law treats the issue of tortious liability for company directors in the UK, Australia, and the United States. As will be shown, that liability differs greatly across those three jurisdictions, and it appears that those differences are a manifestation of differing cultural values.

In general, laws reflect the values of the jurisdiction that has enacted them. The specific case of how company directors are treated under UK, Australian and United States law provides insights into the cultural values of those jurisdictions and demonstrates what function the company performs in those societies, what status company directors enjoy, and the degree of accountability to which company directors are held when a decision or gross malfeasance results in huge losses for the company and its shareholders.

A salient example of how a company director's behaviour can be ruinous comes from the case of AWA Ltd v Daniels, decided by the Australian Supreme Court in 1992 (1992 7 ASCR 759). AWA was a well-established Australian company involved in the manufacture, import and export of electronic components. Because the company occasionally lost money due to

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traditional model which asked that a director do only as much as one might expect of someone like the director (Tomasic, 392). In other words, in the absence of blatant dishonesty or bad faith, directors were excused from liability. Today in Australia, directors are expected to be well informed of company matters, even to the point of attending company meetings regularly unless they have a valid excuse. Directors are therefore presumed under Australian law to know what their subordinates are doing and to be in charge of daily operations. In this way, Australian law has made directors personally responsible. As one Australian court noted, an individual entrepreneur who squandered investors' funds could be called to account for breaching his duty of care; the court added "we are not impressed by this perceived barrier" against holding directors liable at common law (Daniels v Anderson, 1995). According to one Australian jurist, Australian law in this area differs from English law in the following ways. First, company directors are expected to maintain a greater awareness of the company's affairs. Second, directors cannot presume that their subordinates' integrity is beyond reproach. Third, Australian courts look for a degree of

Category: Business - C